Monday, August 8, 2011

Apple insists to intervene in Lodsys lawsuit against app developers

About two weeks ago I reported on Lodsys's lengthy opposition brief to Apple's motion for an intervention. Many iOS app developers -- not only the ones who have already been sued but also countless others who have not yet decided on whether to accede to Lodsys's demands -- are anxiously awaiting a court decision on Apple's motion, which was filed almost two months ago.

In today's reply brief, which I have uploaded to Scribd, Apple still requests a court hearing on its motion. Things may still take some more time, but there will be no more written pleadings unless the court asks the parties to address particular questions in more detail. At this stage it's possible that the court decides very quickly, and I continue to be reasonably optimistic that Apple's motion will be granted.

Lodsys made a license argument that was heavily redacted. Apple's reply is also heavily redacted except for a passage in which Apple says that Lodsys's request to stay Apple's motion pending discovery is a non-option: "Factual issues concerning the construction of this provision [presumably this refers to a provision in the license agreement] must be resolved on the merits, not at the pleading stage on a motion to intervene.

Apple dismisses Lodsys's argument that its motion for an intervention was "premature" (just because Lodsys later amended its complaint) as "flawed". Apple argues that a motion can only be "untimely" if it's too late -- not because it's too early.

Lodsys claimed Apple had only an "economic" interest in this case. However, Apple says that Lodsys has ignored "the authorities cited by Apple in its opening brief, which hold unambiguously that a license is itself a sufficient property interest as a matter of law." Moreover, Lodsys had denied that Apple had a supplier-customer relationship with the app developers that could be a basis for an intervention, but Apple says that it "provides products and services to the App Makers in exchange for payment, precisely the type of supplier-customer relationship courts have found sufficient to permit intervention". Apple adds that it's too early for the court to take decisions on the nature of Apple's relationship with the developers: "Those issues must be resolved through discovery."

Apple claims an impairment of its interests if it isn't allowed to intervene: "Apple's License lies at the heart of this case, Lodsys has already sued numerous significant Apple customers and threatened dozens of others, and a boycott of some of Apple's core products by App developers has been proposed." I believe Apple's claim that "dozens" of other customers have been threatened is a very conservative estimate. I've already become aware of so many Lodsys letters (and seen several of them) that I wouldn't be surprised if the actual number was in the hundreds rather than dozens, but maybe Apple itself has so far only received reliable information concerning dozens of them.

Lodsys tried an end run around Apple's motion for an intervention by claiming that the more recently added defendants -- Lodsys, EA and other major games companies -- are (unlike the app developers Lodsys sued originally) capable of defending themselves. This is what Apple has to say about that: "Although some of the new defendants may have greater resources than the original defendants, Lodsys does not contest the fact that none of the defendants have the technical information, expertise, and knowledge regarding how Apple's technology works or the negotiation and intent of the License itself to fully articulate and develop Apple's exhaustion defense. [...] This distinction alone is sufficient."

As a fallback that would also serve Apple's purposes, Apple continue to argue that the judge would have every option to grant a permissive intervention. Apple claims that "Lodsys concedes that Apple's Motion raises many common issues of law and fact to those likely to be raised by the parties to this action." What Apple calls "concedes" is just that Lodsys quoted from Apple's motion and from a different case. It's not like Lodsys affirmatively stated that Apple's motion raises common issues, but Lodsys didn't really contradict that claim either, and the combination of all of that is what Apple calls a concession.

Let's hope that the court will grant Apple's motion very soon.

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About Me

Florian Mueller is an app developer who used to be an award-winning intellectual property activist. His 30 years of software industry expertise span different market segments (games, education, productivity and infrastructure software), diverse business models, and technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof, except that he is long AAPL.) He is now developing games for smartphones and tablet computers.